Air India’s proposal to sell five Boeing 777-200 long-range aircraft to Abu Dhabi-based Etihad Airways is likely to be considered by the Union Cabinet at its meeting here on Thursday.

The Cabinet’s approval is required before Air India can sell the aircraft to Etihad.

To fetch $300-350 m The sale, which is expected to fetch Air India $300-350 million, was first announced in October this year, when the two airlines signed a letter of intent (LoI). The funds generated by the sale will be used by Air India to settle some of its debt.

In February 2012, Air India’s lenders approved its corporate debt restructuring plan worth Rs 18,000 crore and decided to provide fresh cash credit of Rs 2,200 crore.

Etihad will use the aircraft to operate non-stop flights between Abu Dhabi and Los Angeles from June 1. “We are looking forward to starting direct services to Los Angeles, as well as increasing our flying to South America. This is the aircraft to do that,” James Hogan, President and Chief Executive Officer of Etihad Airways, said when the letter of intent was signed.

Air India acquired the Boeing 777-200 LR aircraft as part of the 68 aircraft it had ordered from the US-based aircraft manufacturer in 2006. The deal was valued at over Rs 35,000 crore when it was signed.

The Cabinet will be taking up the sale proposal a month after Etihad Airways completed a deal to purchase 24 per cent stake in Jet Airways.

The over Rs 2,000 crore deal, which was unveiled in April, is the first cross-border transaction in the Indian aviation sector after it was opened up for foreign direct investments last year.

ashwini.phadnis@thehindu.co.in

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